How does the Inflation Benefit impact the Daily Benefit of your long-term care insurance policy?

I noted in a previous post that the Daily Benefit is the single most important part of your long-term care policy.  The Daily Benefit, however, is linked to the Inflation Benefit.  How much your long-term care policy will pay for each day you need care depends upon not only the Daily Benefit, but also the Inflation Benefit.

The following chart illustrates how your choice of Inflation Benefit impacts the growth of the Daily Benefit over a 10, 20, and 30-year period.  This chart assumes a Starting Daily Benefit of $150:

3%
Compound
5%
Simple
5%
Compound
Starting Daily Benefit$150 $150 $150
After 10 Years$202$225$244
After 20 Years$271$300$397
After 30 Years$364$375$648

Surprisingly, over a 30-year period, 5% Simple grows the Daily Benefit slightly faster than 3% Compound.

5% Compound grows the Daily Benefit much faster than either the 3% Compound or the 5% Simple.